Despite commencing on 30 January 2012, the implications of Personal Property Securities Reform have not been fully understood by the business community.
We are half way through the transition period allowed for pre-30 January 2012 security interests to be transferred to the new PPS Register without loss of priority.
If you had a security registered on any of the registers replaced by the PPS Register (eg ASIC, REVS) and it was not transferred to PPSR it must be registered by 31 January 2014 to retain the original creation date priority.
If you have a security interest created before 30 January 2012 which was not previously required to be registered you have until 31 January 2014 to register it. But if there is another “transitional security interest” over those assets which is already registered it may have priority.
Whilst retention of title interests created before 30 January 2012 can be registered until 31 January 2014 they will not apply to goods delivered after 30 January 2012. Goods delivered after 30 January 2012 will not be protected under a retention of title agreement unless that agreement was registered on PPSR.
New types of security
Before PPSR the supply of goods on credit involving retention of title (Romalpa clauses), by consignment and equipment leases were not capable of registration.
Nor were a variety of other arrangements when a business gave possession of its property to someone else.
Even if a business is not transferring ownership, when it allows a consumer or another business to have possession of its goods you should consider registering your interest in those goods (depending on the particular transaction).
Risks under PPSR
There are 2 major risks under PPSR:
1. the risks of not registering a security interest: if a business does not register its interest in the goods it risks losing its claim against another creditor of the customer. Or it could lose its rights if the customer sells the goods to a third party. Or if the customer becomes insolvent.
2. Even if you register your interest it must be correctly registered claiming the correct type of security interest for the correct type of collateral class.
If you haven’t reviewed your business activities for PPSR implications, call Bright Law.
Here’s a video from the PPS Registrar